Correlation Between Microsoft and Bank Cimb
Can any of the company-specific risk be diversified away by investing in both Microsoft and Bank Cimb at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Microsoft and Bank Cimb into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Bank Cimb Niaga, you can compare the effects of market volatilities on Microsoft and Bank Cimb and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Microsoft with a short position of Bank Cimb. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Bank Cimb.
Diversification Opportunities for Microsoft and Bank Cimb
Weak diversification
The 3 months correlation between Microsoft and Bank is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Bank Cimb Niaga in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank Cimb Niaga and Microsoft is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Microsoft are associated (or correlated) with Bank Cimb. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank Cimb Niaga has no effect on the direction of Microsoft i.e., Microsoft and Bank Cimb go up and down completely randomly.
Pair Corralation between Microsoft and Bank Cimb
Given the investment horizon of 90 days Microsoft is expected to generate 0.91 times more return on investment than Bank Cimb. However, Microsoft is 1.1 times less risky than Bank Cimb. It trades about 0.06 of its potential returns per unit of risk. Bank Cimb Niaga is currently generating about 0.06 per unit of risk. If you would invest 32,302 in Microsoft on September 1, 2024 and sell it today you would earn a total of 10,044 from holding Microsoft or generate 31.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 96.24% |
| Values | Daily Returns |
Microsoft vs. Bank Cimb Niaga
Performance |
| Timeline |
| Microsoft |
| Bank Cimb Niaga |
Microsoft and Bank Cimb Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Bank Cimb
The main advantage of trading using opposite Microsoft and Bank Cimb positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Bank Cimb can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Bank Cimb will offset losses from the drop in Bank Cimb's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated |
| Bank Cimb vs. Bank BRISyariah Tbk | Bank Cimb vs. Ace Hardware Indonesia | Bank Cimb vs. Merdeka Copper Gold | Bank Cimb vs. Mitra Pinasthika Mustika |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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